Despite two profit warnings for 2005, PSA Peugeot Citroen’s
chief spokesman for the UK, Jonathan Goodman, said that, seen
in the context of a declining European market, things aren’t
too bad and this year’s “disappointing” earnings should be
boosted in 2006 as new models arrive.
PSA Peugeot Citroen last week issued its second
profit warning in just three months and now expects to
report operating profits of EUR1.9bn (GBP1.3bn) for 2005, or
3.4% of sales.
Last October, it warned that profits would be less than 4%
of sales. The French automaker sold 3.39m vehicles in 2005, up
0.4%, at a time when most of Europe's carmakers are struggling
with weak sales.
Speaking exclusively to just-auto during the right-hand
drive 407 coupe media launch, Goodman, PSA’s London-based
director of corporate communications and external affairs,
said the results were “below expectations” particularly due to
a “disappointing” fourth quarter that affected all major
automakers in Europe, when sales fell around 2.5%.
He noted that, as part of its on-going cost-cutting
project, PSA has reduced its inventory and consequently
shipped fewer cars to dealers in the first quarter – the
corresponding volume reduction affected results.
Signalling a new tack for the firm, whose Peugeots and
Citroens are popular company car choices here in the UK,
Goodman noted that PSA has “shied away from discounting this
year” as “you cannot sell to fleets if you’re losing
money”.
Asked if the pending launch of the new B-segment 207, which
will ultimately replace the popular 206 (5m worldwide so far
and counting) signals the raising of an axe over PSA’s Ryton
206 plant near Coventry, Goodman stressed the plant would soon
be the main European plant for the model line and was
scheduled to make 108-109,000 units this year.
“The 206’s [remaining] life depends on demand and we will
carry on making it if the demand is there.
“Post 206, it’s too early to say [about Ryton’s
future].”
Goodman said that, although there was an industry trend to
move some production to eastern Europe, it was unlikely that
PSA would do much more than it has done so far.
He said the company already had the joint venture plant
with Toyota in the Czech Republic that builds the Peugeot 107
and Citroen C1 alongside the Japanese firm’s Aygo while
a new 207 plant in Trnava, Slovakia, comes on-stream in
mid-2006.
“But we have a big industrial base in western Europe and
there’s no suggestion [we would shift that production],” he
added.
Goodman noted that, overall, PSA plants achieve 108-110% in
the Harbor productivity index and said “you can’t achieve that
by shutting plants”.
Ryton, too, had made “tremendous improvements in
productivity”.
“Right-first-time has risen from 55 to 78% and that puts it
up amongst the best of our plants,” Goodman said. “It has to
be at the top of its game and under a new plant director it is
achieving that.”
Noting that the company’s relationship with the car working
unions at Ryton has generally been good – he acknowledged a
little “niggle” over recent shift axings – Goodman said PSA
had a little concern over the creation in 2007 of a ‘super
union’ – when the GMB, Amicus and TGWU unions are scheduled to
combine.
“There is an underlying concern there. We hope there will
be no posturing [with one or other of the merged factions
wanting to attract attention through industrial action],” he
said.
Goodman said all European car makers are facing essentially
the same issues at the moment – all need to reduce costs and
increase efficiency.
He said PSA had taken out EUR600m a year in costs but
EUR300m of that gain was being eaten up by raw material cost
increases.
He said the group expected a better 2006 with new products
and the first full sales years for cars such as the 407 coupe,
C6, 107, C1 and 1007.
Coming are the new 207 and a redesign for the popular
Citroen Picasso minivan.
“You could say we’re cautiously optimistic,” Goodman
added.
Graeme
Roberts
